The Conglomerate Family Became A Villain [EN]: Chapter 235

235. Currency War (2)

“A 210% quarterly performance?”

“Are we hearing things?”

The reporters exchanged glances, clicking their tongues in disbelief.

But they barely had time to process the information before Sarah continued.

“Victoria Fund’s assets under management have exceeded $20 billion and are projected to surpass $30 billion next quarter.”

Money was flowing in as if from a limitless spring.

The reporters furiously scribbled notes, their brows furrowed in concentration.

“Is this even possible?”

“Even hedge funds don’t generate returns like this.”

“Then, perhaps they’re engaging in investments even riskier than those of hedge funds.”

Victoria Fund’s impressive returns astonished many, but the sheer scale of the profits also aroused suspicion about the underlying investments.

Two hours after Sarah’s announcement.

A U.S. media outlet published an article alleging that Victoria Fund was making riskier investments than hedge funds, potentially endangering Victoria Corporation itself.

Sarah read the article after returning to Boston.

She received a call from Robert on her way home.

“Sarah, there’s a strange article circulating.”

“A strange article?”

Robert informed her about the article questioning Victoria Corporation’s future.

“Riskier than hedge funds, huh? I suppose some might see it that way.”

Robert’s voice rose in concern as she calmly acknowledged the situation.

“Sarah, this is an attack on our company!”

He believed they should issue a rebuttal or a formal protest.

However, Sarah disagreed.

“I think this is healthy criticism.”

“Short selling could rear its head again.”

“If short selling starts, Charlie will handle it.”

Robert frowned.

“Sarah, aren’t you relying too much on Charlie?”

“This company was founded by Charlie.”

“But it’s not a company run by Charlie alone. And now, Victoria Corporation has over 10,000 family members.”

This “family” encompassed not only full-time employees but also short-term contract workers.

“I know. That’s why we shouldn’t be easily shaken.”

Robert sighed deeply.

“Hoo… I understand. So, we’re not going to respond to this matter.”

As he was about to end the call, Sarah asked,

“Robert, are you feeling uneasy?”

Robert paused.

“Uneasy?”

“I was wondering if you felt Charlie’s Japanese investments were excessive.”

“Charlie’s investments have always been like that. I didn’t think this one was particularly risky.”

Robert privately believed that not only the Japanese investments but also the modular platform development carried significant risks.

“Robert, please trust Charlie.”

Robert replied stiffly.

“It’s not that I’m against Charlie. I just called because I thought it was a matter of principle to counterattack when attacked.”

Sarah’s voice softened.

“I understand your feelings, Robert. I’ll see you at the office tomorrow.”

Hanging up, she sighed deeply.

“Haa…”

Her secretary, Tom, hearing her sigh, inquired,

“Are you having disagreements?”

Sarah leaned back in her seat.

“It’s not disagreements, but a clash of beliefs.”

She mused, ‘We didn’t have this many disagreements when we were developing and distributing games.’

She reflected on those past events, though they were only a few years behind her.

* * *

October 11, 11:00 AM.

Just as Jung Hyun-woo managed to get out of bed, he received a call from Lyra Marine.

“Charlie, it’s Lyra.”

Jung Hyun-woo smoothed his disheveled hair and answered.

“Lyra, what’s going on?”

“The yen is plummeting.”

“Plummeting?”

“It’s already down 3% this morning.”

Jung Hyun-woo checked the time and frowned.

“Is there any news?”

He grabbed the nearest newspaper.

‘There’s no special article.’

Lyra finally elaborated.

“There’s no specific news today. However, it seems that several banks have formed an alliance.”

Jung Hyun-woo’s brow unfurrowed slightly.

“An alliance? What do you mean?”

Lyra explained that several banks were shorting the yen and the [Deutsche] mark, and had formed an alliance for this purpose.

“Is Bank of America participating in that alliance?”

Lyra shook her head.

“We’re not.”

As major shareholders of Victoria Corporation, they refrained from participating in foreign exchange short selling.

‘JP Morgan probably isn’t participating either.’

Jung Hyun-woo could roughly guess which banks were involved.

‘Morgan Stanley, Goldman Sachs, Lehman Brothers, and Merrill Lynch, probably.’

The combined firepower of those four banks was considerable.

He lowered his voice.

“I extend my gratitude on behalf of Victoria Fund.”

Lyra chuckled at his formal tone.

“Charlie, what are you talking about? Charlie is Victoria Fund. Representing Victoria Fund?”

“It’s not necessarily like that.”

“Charlie, anyway, we need to come up with a plan. We can’t just sit here.”

Jung Hyun-woo scanned the newspaper, listening to her anxious tone.

‘The story about Victoria Corporation’s performance announcement is surprisingly small.’

Victoria Corporation was now a leading company in the United States.

The fact that such a company’s earnings surprise wasn’t being prominently featured suggested that the narrative was shifting.

“Hmm…”

Lyra’s voice rose.

“Charlie?”

“No. There’s an interesting article here.”

“An interesting article?”

“It’s an article called ‘Currency War’.”

Lyra clicked her tongue.

“Tch, the Eastern bank alliance must be flexing its muscles.”

Jung Hyun-woo bit his lip.

“Are they trying to create public opinion to justify foreign exchange short selling?”

“They’re trying to get individual investors and small investment groups to participate.”

The banks would lead the charge, and individual investors would follow.

‘If it succeeds, it could create a self-fulfilling prophecy.’

However, this couldn’t be achieved through intention alone.

“Lyra, don’t worry.”

“Charlie…”

“The U.S. government will not allow the yen and the mark to collapse.”

Jung Hyun-woo’s confidence rested on the U.S. government.

‘People assume that U.S. government officials are in cahoots with Wall Street financiers.’

But that wasn’t entirely true. While their interests often aligned, their priorities differed.

Government officials, especially those close to the president, prioritized approval ratings and the next election, while Wall Street valued profit above all else.

Therefore, if approval ratings were threatened, officials could implement policies that contradicted Wall Street’s interests.

“Have you heard anything from the U.S. government?”

“Not really. I just wanted to reassure you that the U.S. government’s policy isn’t geared towards devaluing foreign currencies.”

Prioritize the U.S. government’s policy stance.

Lyra sighed.

‘Hoo… He’s making the most orthodox arguments while making the riskiest investments.’

She ended the call with a warning to be careful.

After finishing the call, Jung Hyun-woo carefully read the newspaper.

Then he picked up the receiver.

He dialed Victoria Corporation.

“This is Victoria Corporation’s secretary office.”

“Olivia? It’s Charlie.”

Olivia, Sarah’s former secretary, had been promoted to head of the secretary office.

“Charlie? Are you feeling okay?”

“I’m fine.”

“Is Sarah in a meeting right now?”

“Just a moment.”

Olivia checked Sarah’s schedule.

“Ms. Hilton’s meeting ended 10 minutes ago.”

“Then please connect me to Sarah.”

“Understood.”

Ring, ring.

Shortly after, Sarah’s clear voice came on the line.

“Charlie, are you feeling okay?”

“I’m fine now.”

“The doctor?”

“I sent him back.”

Sarah raised her eyebrows.

“What?”

“My fever is gone.”

“Still…”

“I didn’t want to waste medical services.”

Jung Hyun-woo considered it a waste of resources to have a doctor and nurse waiting on standby for a single person.

“More importantly, how’s the company?”

Sarah cleared her throat.

“It’s fine, except for the delays in the development team.”

“Delays?”

“They’re trying to apply a new module system to this service, but it seems difficult.”

The service in question was the system application for financial companies in the western region.

“That’s a problem I need to solve.”

“It’s a technical issue. Charlie’s domain.”

Sarah made it clear that she couldn’t resolve it.

“And… I got a call from John.”

“Which John are you talking about?”

John Peer or John River?

“The fund side.”

“Mr. Peer, then. Was it about the exchange rate, perhaps?”

“How did you know?”

“I received a call too.”

Sarah nodded.

“I see. It’s down more than 3% this morning alone, and the fund’s quarterly return is -33%.”

“Why -33%?”

“3% of $30 billion is $900 million. We invested $3 billion, so isn’t that how they calculated -33%?”

“Is that correct?”

Jung Hyun-woo questioned her, considering her background in finance.

“Hmm, should I ask an accountant?”

“No. I don’t want to know that much.”

“Anyway, he said the losses were significant.”

Jung Hyun-woo asked,

“Was there anything else?”

“When I met him yesterday, he suggested hedging.”

“Hedging, as in the yen?”

“Right. He regretted not hedging back then, saying we could have reduced the losses.”

Risk management was fundamental to investment. John Peer was a textbook example of this.

“It won’t fall more than 10%.”

“Did you hear something?”

“No.”

Sarah narrowed her eyes.

“Charlie, you know that if the basis is weak, the results won’t be good.”

“The basis isn’t weak. I’m just saying it because everyone seems more worried than expected.”

“Hmm, what’s the basis that Charlie is thinking of?”

“The Plaza Accord [a 1985 agreement among major economies to depreciate the U.S. dollar].”

“Believe in the direction of U.S. government policy?”

Jung Hyun-woo nodded.

“I don’t think there’s anything more fundamental to investment than that.”

Sarah lowered her voice.

“Charlie, you’re not thinking of hedging?”

“No.”

“Not at all?”

“Not at all. Hedging means your heart is wavering.”

Sarah spoke firmly to John Peer, but she confided her true thoughts to Jung Hyun-woo.

“It could be insurance, unexpectedly.”

“If my heart is wavering to the point where I need insurance, I wouldn’t make such an investment.”

Sarah’s voice rose.

“Charlie is resolute. You’re a strict teacher.”

Jung Hyun-woo shrugged.

“Sarah, I might be the strange one. So, don’t take my words as gospel.”

One successful investor had once said:

– Risk 대비야말로 훌륭한 투자가의 소양이다. (Preparing for risk is the hallmark of a great investor.)

위기에 대비하지 않는 자는 위기가 왔을 때 모든 것을 잃게 될 것이다. (Those who do not prepare for crisis will lose everything when it arrives.)

‘Someone who experienced the Great Depression would say that.’

Jung Hyun-woo didn’t believe a Great Depression-level event was imminent.

‘Because the world isn’t like it was in the early 20th century.’

There might be a recession, but not a depression. This was the late 20th and 21st centuries, as he knew them.

* * *

“That’s for sure.”

Den Morning, the chief dealer at Goldman Sachs, smiled, swirling his drink at a high-end bar with Damon Perelman.

“I think it’s just the beginning.”

Den Morning raised his eyebrows at the phrase “just the beginning.”

“You’re saying it’s just the beginning even though we’ve made over $3 billion in just a few days?”

“It’s $3 billion with eight banks involved. It can’t be called a big profit.”

Den Morning clicked his tongue at Damon Perelman’s ambition.

‘Tsk, this guy. He’s taking money too lightly.’

He acknowledged Damon Perelman’s abilities but didn’t consider him a particularly respectable person.

“What’s happening with Terra?”

“Terra, you say?”

“They didn’t participate in this short selling.”

The hedge fund Terra had lost a significant amount of money shorting Victoria Corporation the previous year.

“They’re cowards.”

“Cowards?”

“It seems they were scared by a kid named Charlie Jung.”

Den Morning’s smile faded.

“If you’re saying that, they must have been hit hard last year.”

“They weren’t hit that hard. They only lost a little money.”

Damon Perelman downplayed the loss, but Terra’s CEO, Kin Shevchenko, had complained to IMF Deputy Managing Director Ein Perelman, indicating it was a serious matter.

“Is that so?”

Damon Perelman ordered another drink.

“We need to expand the short selling.”

Den Morning raised his eyebrows.

“Wouldn’t it be difficult to increase the short selling scale any further here?”

“Are you saying the U.S. government will intervene?”

“What the U.S. government wants is a high valuation of the yen.”

“But hasn’t the Plaza Accord already failed?”

Damon Perelman argued that since the Plaza Accord had failed, the U.S. needed to find another solution.

However, the banks participating in the short selling didn’t necessarily agree with his assessment.

They were primarily motivated by the belief that the yen had become overvalued.

“The Plaza Accord has failed. Then what will the U.S. government do?”

“They will demand that the Japanese government open its market.”

They would demand the acceptance of U.S. agricultural products without tariffs.

Damon Perelman believed this was the likely course of action.

Den Morning nodded.

“I see. You… you didn’t short your bonus, did you?”

Goldman Sachs and other banks had paid Damon Perelman a $10 million bonus after the short selling generated substantial profits.

“I shorted it.”

“What?”

“Not the yen.”

Den Morning frowned.

“Did you short the mark?”

Damon Perelman smiled.

“Of course not. What I shorted was Victoria Corporation.”

Den Morning knew that he had spearheaded the short selling of Victoria Corporation the previous year.

“You still think Victoria Corporation is a bubble.”

“Where else is there a bubble as big as Victoria Corporation?”

Damon Perelman had secured $60 million in funds by borrowing $50 million with $10 million as collateral.

‘Can you become the world’s number one company with just scraps of data recorded on your tape? Don’t joke with me.’

He believed that manufacturing tangible goods was the foundation of the world economy and that the IT industry was a mere fantasy.

In the 1980s, many on Wall Street shared his views.

And their perspective wasn’t entirely unfounded.

In the 1990s, the U.S. IT industry experienced a massive bubble, and its subsequent burst in the 2000s caused significant economic turmoil.

Of course, Victoria Corporation’s stock price didn’t reflect the kind of bubble he imagined.

Victoria Corporation held a monopoly on network businesses, including JP Services, and dominated the North American game market through G Shop.

Furthermore, there was Victoria Fund.

Victoria Fund’s high returns rivaled those of legendary funds.

October 24, 1986.

Victoria Corporation’s stock price broke $40, shocking the market.

New York Stock Exchange dealers sighed as they watched the quote board.

“The stock price continues to fall even after recording an earnings surprise.”

“Isn’t the yen falling?”

“Are you saying that next quarter’s earnings will fall?”

“That’s right.”

“Tsk, the problem is that they invested too much in Japan.”

U.S. investment institutions and media outlets issued pessimistic forecasts for Victoria Corporation.

Of course, Jung Hyun-woo ignored their predictions.